CNN
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Apple is expected to unveil the iPhone 16 on Monday. While the new phone will likely get a few minor upgrades on the outside, Apple is betting that significant changes on the inside will excite customers who haven’t had a compelling reason to upgrade in years.

The company is expected to introduce the first wave of iPhones specifically designed for generative artificial intelligence (which allows users to create text and images) at its annual hardware event, which kicks off at 1 p.m. Eastern Time.

The event was announced with the cryptic tagline: “It’s Glow Time,” but Apple has so far said nothing about its meaning.

Apple is under immense pressure ahead of the event to prove that its new AI features and other iPhone 16 updates are worth paying for an upgrade. Apple must also convince investors that it hasn’t fallen behind in the AI ​​arms race, as rivals have already released similar features using the new technology.

Since launching the 5G-capable iPhone 12 in 2020, the company has given customers few reasons to buy the latest generation. Phone cameras have largely advanced to the point where they’re sufficient for most people’s day-to-day needs without major hardware changes, and at some point, the human eye isn’t even capable of perceiving higher screen resolutions.

As a result, iPhone sales, which account for half of the company’s revenue, have been disappointing.

The company’s stock had also been relatively stagnant until the unveiling of Apple Intelligence, a sign that investors are banking on AI to convince people to buy new iPhones. Apple’s shares have risen 14% since the June 10 event and nearly 18% year-to-date.

If Apple delivers on its promises, it could make money: About 300 million iPhones worldwide haven’t been upgraded in more than four years, according to a research report last month by analyst Dan Ives of investment firm Wedbush.

So while Apple will likely highlight changes to various products and services like AirPods or even Apple TV+ on Monday, “it’s all about the iPhone upgrade cycle. Everything else is subplot,” DA Davidson analyst Gil Luria told CNN.

Subplot or main character: here’s everything we expect from the Apple event.

The company has already hinted at a few things that Apple Intelligence will be able to do: It will enable more natural conversations with Siri, help you compose emails, make it easier to find specific moments in your photo albums and incorporate a user’s personal information into its responses. The company’s job on Monday will be to show iPhone users what that will look like in the real world.

“Expect to see demos of how you can get summaries within your text chain,” Luria said. “You know, why did Tiffany M have a falling out with Tiffany R, and you can ask that in the chat and get an answer. Those are the things that people get excited about … to show concrete examples of how people can use Apple Intelligence to do things they couldn’t do before.”

It’s not unusual for new iPhones to get an updated processor chip, but that change could be extra important this year to ensure the iPhone 16 can handle the increased data processing demands that come with the new AI features without sacrificing battery life.

Luria added that he thinks there could also be a subtle change to the iPhone’s appearance, such as a wider screen or updated bezels, “to emphasize the point of an upgrade cycle.”

“There’s something special about the new iPhones, which is that consumers feel like they have the new iPhone and you don’t, which hasn’t been the case for the last four years,” he said.

According to a report from Bloomberg’s Mark Gurman, the iPhone 16 will also get a dedicated camera button.

A key question for Monday’s event is how much Apple will price the iPhone 16 lineup. For the past four years, the new iPhones have started at $799 when they launched.

Apple fanatics have been debating for years whether iPhone models should be made cheaper, while investors prefer to maximize profits.

Many analysts, including CFRA Research’s Angelo Zino, say Apple could modestly raise prices for the iPhone lineup “across the board” because of the new AI features and the costs the company incurs to deliver them.

But it almost certainly won’t be a big price increase, because “they don’t want to lose the enthusiasm (of customers) because of the shock they get if they overestimate the price,” Luria said.

Rumor has it that Apple may also announce updates for the Apple Watch and AirPods.

The Apple Watch Series 10 is expected to be thinner than its predecessors but feature a larger display. The company is also set to release new AirPod models in the lower and mid-range segments, Gurman said, citing anonymous sources familiar with the matter.

These updates follow new software offerings for both devices that Apple announced in June at its annual developers conference.

AirPods users can answer or decline a call with just a nod or a shake of the head. And new vitals tracking on Apple Watch can alert users if they’re getting sick, based on signals like body temperature and heart rate.

–Samantha Kelly and Ramishah Maruf contributed to this report.